AAA Tenant - A tenant with a top credit rating. This type of tenant is often critical to the developer's ability to arrange both construction and permanent financing for a major commercial project, such as a shopping center or office building.
Abandonment - The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with an intent to abandon (give up the interest).
Abatement - A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment, and levy.
Absorption Rate - The rate (speed) at which vacant space is either leased or sold to users in the marketplace. This rate is usually expressed in square feet per year or in the case of multi-family housing, in the number of units per year.
Abstract of Judgment - A summary of money judgment obtained in court. (When this summary or abstract is recorded in the county recorder's office, in some states the judgment becomes a lien on the debtor's property, both presently owned or after-acquired.)
Abstract of Title - A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document
Acceleration Clause - A cause in a deed of trust or mortgage, which "accelerates," or hastens, the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest
Accommodation Recording - Recording of instruments with the county recorder by a title company merely as a convenience to a customer and without assumption of responsibility for correctness or validity.
Ackowledgment - A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.
Acquisition and Development Loan (A and D Loan) - A loan for the purchase and preparation of raw land for development. Usually a construction loan or land sale is the source of repayment.
Acre - A measure of land equal to 43,560 square feet
Adjustable Rate Mortgage (ARM) - A type of real estate loan in which either the interest rate charged or the length of the loan, or both, can change. This type of loan forces the Borrower to absorb the uncertainty of changes in interest rates during the life of the loan. ARM loans are normally tied to some index such as government securities. Also called ˆ¨variable rate mortgages.
Administrator - A person appointed by the probate court to carry out the administration of a decedent's estate when the decedent has left no will. If a woman is appointed, she is called an administratrix.
Adverse Possession - A process of acquiring title to real property by possession for a certain (statutory) period of time, in addition to fulfilling other conditions.
Affidavit - A written statement or declaration, sworn to before an officer who has authority to administer an oath.
Agent - One who has authorization, either expressed or implied, to act for or represent another party, usually in business matters, such as issuing title insurance policies on behalf of a title insurer for a portion of the premium.
Agreement of Sale - A written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) on an installment or deferred payment plan. It is also known as an agreement to convey, a long form Security Agreement or a real estate installment contract.
Amendment - A change either to alter, add to, or correct part of an agreement without changing the principal idea or essence.
American Land Title Association (ALTA) - An association representing more than 2,100 title abstractors, title insurance companies, title insurance agents, and associate members that was founded in 1907. Members of the association use standardized title insurance forms developed by ALTA to provide uniformity within the industry. ALTA's national headquarters is located at 1828 L Street, N.W., Suite 303, Washington, D.C. 20036; (202) 296-3671.
Amortization - The repayment of a mortgage debt over a period of time in a series of periodic installments. It should be noted that a portion of each payment consists of a blend of interest and amortization ofprincipal. Specifically, this is the payback of the principal portion of the loan owed to the lender. The effect of amortization is to build up the paper value of the owner's equity while reducing the debt obligation.
Anchor Tenant - A well-known commercial retail business such as a national chain store or regional department store (AAA Tenant) strategically placed in a shopping center so as to generate the most customers for all of the stores located in the shopping center.
Anchored Centers - A shopping center with an anchor tenant.
Annual Loan Constant - The ratio of the annual debt payment on a loan to the original amount borrowed. The loan constant is also referred to as a mortgage constant.
Annual Percentage Rate (APR) - The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. For example: 6% add-on interest would be much more than 6% simple interest, even though both would say 6%. The A.P.R. is disclosed as a requirement of federal truth in lending statutes.
Application Fee - Fees charged by lender to cover initial costs of processing a loan application, often including charges for property appraisal and a credit report.
Appraisal - A written estimate of a property's current market value, based on recent sales information for similar properties, the condition of the property, and how the neighborhood might affect future property value.
Arbitrage - The simultaneous buying and selling of any securities, including mortgages, mortgage backed securities or futures contracts in different market places, for the purpose of realizing a profit from different prices.
Assumability - A feature of a loan which allows it to be transferred to the new purchaser of a home. Assumable mortgages can help attract buyers since assumption of a loan requires lower fees and/or qualifying standards than a new loan.
Assumption - The act of conveying real property; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property.
Attorn - To transfer to another or to agree to recognize a new owner of a property and to pay them rent.
Attornment - A tenant's formal agreement to be a tenant of a new landlord.
Average Daily Rate(ADR) - The average rate charged by a hotel for one (1) room for one (1) day; arrived at by dividing the total room revenue by the actual rooms occupied.
Average Life - It is a way to look at the term of a loan or bond that accounts for principal paydowns. If a loan is interest only with a full balloon at the end, the average life will equal the maturity. If there is amortization, principal is being paid over the life of the loan, decreasing the balloon payment and the average life. This number is then used to find the treasury that has the closest remaining term, but is not shorter. For example, a 10/25 loan has an average life of 9 years. 9 years from today is October 2008. The current list of outstanding, non-callable US treasury securities with maturities in 2008 includes March 2008, June 2008, September 2008 and a December 2008. The lender would choose the December 2008 because it is longer than the actual due date.